Seaforth Energy seeks more time to pay debts

A worker staples a seam as he makes one half of a wind turbine blade at Seaforth Energy in Woodside in 2011. (ERIC WYNNE / Staff / File)

A Dartmouth wind energy firm has laid off its entire staff and is trying to negotiate a sale as it wrestles with a multimillion-dollar debt.

Seaforth Energy Inc., a wind turbine manufacturer in Woodside, owes more than $4 million to 62 different creditors, including $2 million to the provincial Economic and Rural Development Department and $954,000 to the Atlantic Canada Opportunities Agency, documents filed with the Office of the Superintendent of Bankruptcy Canada state.

Seaforth now has until Sept. 26 to make a proposal to creditors under the Bankruptcy and Insolvency Act after its request for an extension was granted in Nova Scotia Supreme Court in Halifax on Tuesday.

The company filed its notice of intention with the court on July 14 and PricewaterhouseCoopers Inc. has been appointed proposal trustee.

Tuesday’s order was granted after considering, among other things, the affidavit of David Lombardi, a director at Seaforth Energy.

There was no answer at the company’s phone numbers and Lombardi could not be reached Tuesday.

But in his affidavit, the director detailed the company’s financial woes.

“There are insufficient receivables and pending sales which would bring sufficient new cash into the company,” he says in the affidavit.

“All of Seaforth’s employees have been laid off in order to minimize spending while an agreement is reached with Endurance and the Province of Nova Scotia.”

The court learned Seaforth has contacted more than 15 potential investors or buyers and found one interested party: Endurance Wind Power of Surrey, B.C.

Endurance is included among the list of creditors and is owed $125,000.

Since October, the West Coast firm provided more than $900,000 to help Seaforth complete some projects and cover some operating costs, the affidavit states.

Seaforth Energy makes a 50-kilowatt turbine called the AOC 15/50, and lists an ice-cream factory in Scotland, an agriculture school in Ireland and Universite Sainte-Anne in Church Point among its clients.

By March 2012, the company had installed 150 of the turbines in 13 countries and in March 2013 saw six of its turbines — three in Goldboro, Guysborough County, two near Tatamagouche and one in New Glasgow — come online to mark Nova Scotia’s first COMFIT (Community Feed-in Tariff ) renewable energy project.

Those wind turbines were expected to power up to 120 homes, the province said at the time.

But there were signs of financial difficulties even before the announcement, Lombardi’s affidavit says.

The company noted problems while preparing its financial statements for the 2011 fiscal year, which resulted in “a significant deterioration of Seaforth’s financial position,” Lombardi states.

Unable to meet its financial covenants with TD Bank, the company remained in operation after the province negotiated with Seaforth’s lender, the documents state.

Sales dwindled while the COMFIT power purchase agreement was negotiated, and the company operated on a line of credit from TD guaranteed by the province.

“Despite some success in the 2013 fiscal year, Seaforth never presented a positive cash flow,” Lombardi says in the affidavit.

TD has since called in that line and the province paid it off.

Toby Koffman, spokesman for Economic and Rural Development, confirmed Tuesday that the Nova Scotia government is the only secured creditor.